Disappointing First Year Results at Mondelez International
Mondelez International has reported its first annual financial results since being separated from Kraft Foods’ North American grocery business in October 2012. The global snacking and beverages group increased net revenue by 0.8% to $35.3 billion and operating income by 9.2% to $4.0 billion in 2013, while operating income margin was 11.2%. Organic net revenues increased 3.9%, driven by strong volume/mix of 3.4 percentage points as well as favorable pricing of 0.5 percentage points. Lower coffee revenues, reflecting the pass-through of lower green coffee costs, tempered growth by 0.8 percentage points.
Revenues from emerging markets were up 8.8%, led by a nearly 10% gain in the BRIC markets. Developed markets increased 0.8% as growth in North America and Europe was partially offset by a mid-single digit decline in Asia Pacific.
The group’s ‘power brands’ grew 6.5% with Oreo, Tuc, Club Social, belVita and Barni biscuits, Cadbury Dairy Milk and Lacta chocolate and Tassimo coffee each posting double-digit increases.
“In our first full year as a global snacking company, we delivered solid revenue growth and strong market share performance in the face of a significant slowdown in our categories as 2013 progressed,” says Irene Rosenfeld, chairman and chief executive of Mondelez Internationa. “At the same time, we accelerated investments in emerging markets, strengthened our balance sheet and returned $3.6 billion of cash to our shareholders. Nevertheless, we’re disappointed that our results were below what we and our shareholders originally expected.”
She continues: “We’re committed to improving results in 2014 and beyond. Specifically, we expect to grow organic revenue at or above our category growth rate, which we estimate at approximately 4 percent in 2014. In addition, we remain focused on increasing efficiency and aggressively reducing costs in both our supply chain and overheads to deliver strong margin gains throughout the year. Although we anticipate near-term economic conditions will remain challenging, the plans we are executing give us great confidence in our potential to significantly expand margins and deliver strong top-line growth in 2014 and the years ahead.”
In Europe, full year net revenues increased 1.8%. Organic net revenues increased 0.8%, as strong volume/mix gains, particularly in chocolate, coffee and biscuits were partially offset by lower pricing in coffee and soft performance in gum. Lower coffee revenues tempered Europe’s growth by 1.9 percentage points. The region’s ‘power brands’ grew 3.6%, including double-digit growth in Oreo and chocobakery biscuits, Cadbury Dairy Milk chocolate and Tassimo coffee.
